What is a Franchise Lawyer? 

A franchise lawyer is an attorney who specializes in the laws and regulations governing new businesses and those regarding franchising in particular. Depending on your area, there may be a specific franchise law firm with franchise lawyers who are completely dedicated to federal and state franchise law and don’t practice anything else. However, it is more likely that the firm will simply be business-focused or may have one specialized franchise attorney practicing with them.

A franchise lawyer is also likely to represent both franchisees (those buying a franchise) and franchisors (those selling a franchise), though whichever franchise lawyer or firm you choose won’t be allowed to have any connection with your specific franchisor.

What is Franchising Law?

The most important franchise law federally is the Federal Franchise Rule overseen by the FTC. This law requires franchisors to provide those interested in purchasing a franchise with a Franchise Disclosure Document (FDD) before they sign any franchise agreement. This FDD contains 23 items regarding key information a potential franchisee should know, such as the full amount of upfront and miscellaneous fees, the obligations of both parties, and the franchisor’s financial statements.

How states choose to apply the Federal Franchise Rule is up to them, with states divided into franchise registration filing, and non-registration states. However, all franchisors are obligated to comply with the Federal Franchise Rule internally, regardless of what the states require.

Besides the Federal Franchise Rule, many states also have their own laws and regulations regarding franchising. If you are interested in starting  a franchise it’s vital to understand all the relevant state and federal laws regarding the contracts you are entering into; what liability that puts on you personally, your financial, tax and reporting obligations as well as the relationship between the franchisor and franchised business.

What Does a Franchise Lawyer Do?

A franchise lawyer helps to guide prospective franchisees through the franchising process, ensuring they are represented properly and fully understand the legal obligations being entered into. A franchise lawyer should also ensure that the franchisor upholds all of its regulatory and financial obligations and not insert any onerous terms in its contract.

A properly represented franchisee should be confident in the work their franchise lawyer is doing to represent their interests. As mentioned, some franchise law firms will also represent franchisors, but the same firm can’t represent both parties. A franchise lawyer’s job is to help you understand any contract you are getting into and make sure the other side is holding up its end.

Who Needs a Franchise Lawyer?

Anyone considering becoming a franchisee should also research representation from a franchise lawyer. A good franchisor will already provide extensive details on costs, obligations, and the franchising process so that a potential franchisee knows exactly what they’re getting into. However, having legal representation is always a good idea when making a major business commitment.

Franchise lawyers are particularly important at the outset of your franchising journey, such as when buying a franchise and agreeing on contracts and the terms of your franchising agreement. They can also be important down the road when looking to expand a franchise or for dealing with new contractual situations, such as delineating exclusive territories or selling your franchise.

How to Pick a Good Franchise Lawyer

A good franchise lawyer can be invaluable when setting out to become a franchisee, but as with any other trade, finding the right one for you is important. Here are some things to look out for:

Experience Counts – There are no specific qualifications that define a franchise lawyer, so the best way of judging their capabilities is from their experience. Don’t be afraid to ask your potential franchise attorney about what similar clients they have had or how much work they have done in the field of franchising.

Costs – Lawyers in most fields will charge an hourly rate ranging from hundreds to thousands of dollars. For prospective franchisees who just want help understanding the terms of their contract and legal guidance on some important questions, it can be better to look for a franchise lawyer who will agree to a predetermined fee to perform a set of services, so you know exactly how much of an outlay it’s going to be. A ballpark for a set fee for reviewing a contract with minimal rewrites is $500 – $1,500, though that can increase with changes that need to be made.

Keep a List of Questions – While researching your franchising opportunity, keep a notepad or open document handy to record all the questions you want a lawyer to answer. A lot of contract terminology can be new and in a language only ever used in courts, so having a list of anything you want explained means you won’t lose any time when actually talking with your franchise attorney.

Use Their Knowledge – As well as questions about your contract, an experienced franchise attorney can also have a wealth of information about the field in general. It can be useful to ask more general questions about franchise law, such as: What’s the biggest mistake new franchisees make legally? What legal advice would you give a relative if they were buying a franchise? What is my best recourse if something goes wrong during my franchise agreement?

Where to Find Franchise Attorneys – There are a few places to look into finding franchise lawyers, such as:

• The American Bar Association (ABA) Forum on Franchising
• Your local Small Business Association or Chamber of Commerce
• The International Franchise Association
• Other franchisees or small business owners you know

Conclusion

Franchise lawyers are specialists in franchise law who represent both franchisors and franchisees. For prospective franchisees having a good franchise attorney can be of great assistance for understanding the terms of their contract and the legal obligations of both parties.

At Screenmobile, we treat our franchisees like family, and we want you to be as happy and comfortable as possible, and having a franchise lawyer help you through the buying and contract-signing process can deliver on that. To find out more about what our franchise package has to offer, including obligations, rights, and investments, feel free to get in contact with us to get all the information you need.